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A virtual private server is a cost-effective solution as it allows multiple customers to share the expense of hardware and network connections, without sacrificing privacy, performance or preference. For this reason, VPS is considered one of the most sophisticated modes of automation available for provisioning small to mid-sized enterprise web hosting.

A virtual private server eliminates the restrictions of virtual hosting by providing all of the administrative features of a dedicated server. Each VPS user therefore receives their own set of services that they can customise to their specific needs. Virtual hosting is limited because its users do not have root access and software configurations cannot be customized, even though physical resources are also multiplexed. A virtual private server, by comparison, contains its own unique file system and CGI-BIN, disk space, system resources, bandwidth, and memory allotments. These allow for a high level of customization.

Small businesses that run their own e-commerce websites appreciate the functional isolation of having a private server. A VPS allows them to obtain their own secure certificates and shopping cart software for e-business operations. Many sophisticated VPS solutions even offer third-party plug-ins or modules, allowing users to take advantage of control panel functionality to install everything from the simplest CGI scripts to the most advanced shopping carts.